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Cleveland Hopkins charges airlines among the highest fees of U.S. airports

Updated February 5, 2018 at 4:37 PM;Posted February 4, 2018 at 6:01 AM

Airlines operating out of Cleveland Hopkins International Airport pay some of the highest fees in the country, according to figures from the Federal Aviation Administration. (Michael Francis McElroy/Getty Images)

CLEVELAND, Ohio - Airlines that operate out of Cleveland Hopkins International Airport pay some of the highest fees in the nation -- higher than Chicago and Los Angeles and Pittsburgh - a fact that could limit the airport's ability to finance major construction projects in the future.

There is some good news, however: Those fees should start trending downward, as the airport continues to increase passengers and pay off debt from major investments nearly two decades ago.

Airport Director Robert Kennedy said he is committed to reducing both debt and airline fees, which should put the airport in a better position financially as it gets ready to commission a new master plan. That master plan will outline a range of recommended capital improvement projects for decades to come.

Cleveland Hopkins, like most major U.S. airports, is self-sufficient, which means that no local tax dollars support its operation.

The airport funds its operation by raising money from both airline-related services (landing fees and rental agreements, for example) and non-air services (parking fees and retail revenue, for example).

The fees that Cleveland Hopkins charges airlines, on average, are among the very highest in the United States, according to annual reports filed by all airports with the Federal Aviation Administration. Of major U.S. airports, only Newark, New York's John F. Kennedy, Washington Dulles and Miami are higher, at least by one standard measure.

How Cleveland Hopkins' costs compare:

Cost per enplanement

Enplanements (passengers boarded)

Debt

Interest payment

CLE

$19.70

4.14 million

$724 million

$28 million

Newark

$28.05

20 million

NA

NA

New York-JFK

$25.45

29 million

$1.4 billion

NA

Washington Dulles

$20.95

11 million

$3.4 billion

$145 million

Miami

$19.85

22 million

$6 billion

$279 million

NYC-LaGuardia

$18.68

15 million

NA

NA

Chicago O'Hare

$16.78

39 million

$7.7 billion

$316 million

Pittsburgh

$16.70

4.2 million

$178 million

$9.9 million

Indianapolis

$10.11

4.2 million

$953 million

$46 million

Detroit

$9.57

17 million

$2.3 billion

$71 million

Columbus

$7.30

3.7 million

$100 million

$3.5 million

Cincinnati

$6.90

3.4 million

$47 million

$2.3 million

Akron-Canton

$3.35

700,000

$17 million

$331,000

Note: Cost per enplanement is, in general terms, an airline's cost of doing business at an airport, divided by total number of boarded passengers. It is an average for the airport -- some airlines pay more, some pay less, depending on their costs at the facility.

Source: Federal Aviation Administration; figures are from 2016

There are several ways to measure airline costs at an airport, but one of the most common, according to industry observers, is to compare what is called "cost per enplanement." That's the total cost an airline pays an airport for landing fees, gate rentals and other charges, divided by that airline's total number of passengers at that airport.

Cleveland's average cost per enplanement in 2016 was $19.70, according to the FAA. Columbus' was $7.30, Pittsburgh's was $16.70, Cincinnati's was $6.90.

These fees are generally considered part of an airline's cost of doing business, and are incorporated into the price of a ticket.

Industry analyst Robert Mann said that Cleveland's fees are among the highest in the nation and "could be a real deterrent" to airlines looking to do business here. But he also said that airlines consider many factors when considering where to do fly from and where to expand.

"There's a whole series of issues," said Mann, president of R.W. Mann & Co. outside New York City. "But basically it comes down to: What's the revenue potential and what are the costs. It either works or it doesn't."

At New York City area airports - where fees are among the highest in the country - it certainly works, he said, because there's such strong demand.

Despite its high fees, Cleveland has managed to attract new airlines and additional routes from existing carriers in the years since United Airlines pulled its hub.

In one recent example: Allegiant Air moved its operation from the Akron-Canton Airport to Cleveland Hopkins in early 2017, even though costs at Cleveland are much higher. At the time, an Allegiant executive said the carrier was moving closer to its primary customer base.

Kennedy, on the job for a year, said he is working to bring down the cost to operate at Cleveland Hopkins. He expects Cleveland's cost per enplanement in 2018 to be under $17, about 15 percent lower than it was in 2017.

But Kennedy also said that Cleveland's costs aren't as high as they may seem.

The operating costs for United Airlines, which maintained a hub here until mid-2014, are much higher than other airlines. Among the reasons why: United continues to pay the debt for construction on Concourse D, which was completed in 1999 and mothballed 15 years later.

According to airport figures, United's cost-per-enplanement exceeds $30, while other airlines' costs range from $3 to $13 per passenger, with an average of just over $9.

Even considering that wide range in costs, Kennedy said he's working to bring down the price of operating at Cleveland Hopkins.

Among the ways to do that: increase revenue from non-airline operations, including retail, parking, leases and other areas. Currently, the airport derives about 65 percent of its revenue from air operations and 35 percent from non-air sources - percentages that Kennedy would like to swap.

Cleveland Hopkins' high debt is another factor in its high fees. The airport continues to pay down its debt, which was $724 million in 2016 - much higher than other airports of similar size, including Columbus ($100 million) Pittsburgh ($178 million) and Cincinnati ($47 million). (Detroit's, on the other hand, was $2.3 billion in 2016; Chicago O'Hare's was $7.7 billion.)

"Obviously, if we want to prepare ourselves for the next 20 years and be a competitive airport, we have to be very concerned about that debt," he said. "You have to get the debt down before you can finance major new projects."

Much of Cleveland's debt stems from the construction, nearly two decades ago, of a new runway, Concourse D and the purchase of the I-X Center. United continues to pay off the debt for the construction of Concourse D, which was closed in 2014.

Cleveland Hopkins' finances through the years

Cost per enplanement

Enplanements (passengers boarded)

Total debt

Annual interest payment

2016

$19.70

4.14 million

$724 million

$28 million

2015

$17.76

3.99 million

$782 million

$30 million

2014

$21.25

3.8 million

$816 million

$32 million

2013

$14.21

4.5 million

$816 million

$32 million

2012

$16.10

4.5 million

$857 million

$30 million

2011

$15.56

4.6 million

$875 million

$38 million

2010

$13.05

4.7 million

$825 million

$33 million

2009

$9.59

5.5 million

$839 million

$35 million

Note: Cost per enplanement is, in general terms, an airline's cost of doing business at an airport, divided by total number of boarded passengers. It is an average for the airport -- some airlines pay more, some pay less, depending on their costs at the facility.